Protocols offer a range of products and services that allow people anywhere in the world to transact directly with each other. For example, Compound makes it easier for individuals to lend or borrow crypto assets, giving them access to capital and higher yields with no intermediaries involved. Another example is USD Coin, the largest stablecoin on Ethereum with a market capitalization over $50B, that allows people to easily send and receive funds globally using a digital asset that is pegged to the US dollar. Protocols like these form the foundation of the cryptoeconomy that millions of people interact with daily.
In just over two years, the value locked in these protocols has gone from a few hundred million to over $200B. People all over the world want greater control over their financial futures and web3 protocols are making that a reality.
At Coinbase, we are embracing protocols across all our strategic pillars with four key initiatives:
Integrating protocols into our products. In Coinbase Wallet, and our recently launched dapp wallet, we are natively integrating trading and yield features supported by protocols as well as enabling open access to protocols through our browser. We recently launched Coinbase NFT, which is powered by the 0x protocol to enable low fee NFT swaps. Additionally, through our DeFi Yield product, we are integrating with protocols like Compound to offer users in eligible jurisdictions higher yields on their holdings. We are excited about how protocols can enable better user experiences and aim to keep integrating them deeply into our products.
Building protocols and supporting innovation. We support protocols, regardless of how they will directly integrate into Coinbase. We support protocol innovation through our Project 10% program, which funds moonshot ideas including the recent Coinbase Ventures investment in Backed. We’re also supporting protocol work in the ecosystem through our developer grants program and open source contributions like Rosetta, which makes it easier to integrate protocols into Coinbase. Today, we also announced that Coinbase Cloud is supporting a group of experienced founders and operators who are building the first enterprise-grade liquid staking protocol.
Funding protocols in the broader ecosystem. Coinbase Ventures has invested in protocols throughout its lifetime and is an early investor in some of the most exciting web3 protocols, including Compound, UMA, Saddle, Radicle, Synthetix, Notional, Goldfinch, and others. In the first quarter of 2022 alone, Coinbase Ventures closed 70+ deals (300+ to date). It invests across the web3 technology stack and is expanding cross-chain investments beyond Ethereum with the goal of promoting an open multi-chain future of finance.
Investing in top talent and core technology. We’re building a best-in-class Smart Contract Engineering team to support our protocol work and integrating protocol thinking into our product management practice. Through developer tooling, hackathons, and company wide knowledge sharing and experimentation, we are building a community that sets the standard for web3 talent. In the year ahead, we are also excited to contribute open source developer tools and libraries to support building protocols at scale.
Last year we wrote about Coinbase embracing decentralization by adding more assets, expanding internationally, integrating with third-party platforms, and emphasizing self-custody. We closed by saying:
Many of the most innovative use cases in crypto are being created in decentralized apps. By fully embracing this trend we can put crypto in the hands of more people around the world and thereby increase their economic freedom.
We’ve been hard at work embracing this vision by investing in web3 protocols at Coinbase — and while we’ve made extensive progress, we’ve got a long way to go. We’re excited for the journey.
If these challenges excite you, join our team and help build an open financial system for the world.
was originally published in The Coinbase Blog on Medium, where people are continuing the conversation by highlighting and responding to this story.
